Court Raises the Discoverability Bar for Private Attorneys General

Plaintiffs’ counsel in civil Competition Act class actions often view themselves (and sometimes even refer to themselves) as ‘private attorneys general’ pursuing those whose conduct distorts the economic landscape. In what is certain to be seen as a controversial ruling, Justice Perell of the Ontario Superior Court has reminded plaintiffs’ counsel that if they want to fulfill the role of a private attorney general, then they must act like one.1 The decision arises in the context of the massive ongoing futures exchange market (“FX Market”) price fixing class action.

In June 2013, a report was published by Bloomberg News alleging that a group of currency traders had been front-running their clients’ orders and rigging the foreign exchange benchmark rates. Regulatory investigations in the US, UK and EU were immediately launched and class action lawsuits followed. The Canadian class action was commenced in September 2015. Sixteen groups of financial institutions were named as defendants. It was alleged that the conspiracy spanned the period January 1, 2003 through December 31, 2013. Noticeably absent from the list of defendants were the Bank of Montreal and the Toronto-Dominion financial institutions, despite these institutions being known to be involved in the FX Market.

In May 2016, plaintiffs reached a settlement with the UBS defendants, subject to court approval being obtained. In accordance with the terms of the settlement, UBS provided an evidentiary proffer that allegedly implicated the Bank of Montreal and Toronto-Dominion institutions. In July 2016, plaintiffs moved to add these parties as defendants. Following lengthy delays, the plaintiffs’ motion was heard in late November 2017. Plaintiffs took the position that they could not have “discovered” the involvement of the Bank of Montreal and Toronto-Dominion conspirators until the UBS proffer. Their affiant deposed that no public document had previously referred to these parties’ alleged involvement in the conspiracy and that the May 2016 UBS proffer was the first occasion that they could have learned of their involvement. They refused, however, to divulge the details of this evidentiary proffer. The Bank of Montreal and Toronto-Dominion institutions took the position that the plaintiffs had failed to exercise reasonable diligence in their investigation. They did not dispute that there had been no public reference to their alleged involvement.

After reviewing the relevant limitation provisions of the Limitation Act and the Competition Act and related case law, Justice Perell concluded that while subjectively the plaintiffs did not know they had a conspiracy claim against the Bank of Montreal and Toronto-Dominion institutions, he was not persuaded that they had exercised reasonable due diligence in investigating the matter, and that if they had, they would have discovered enough facts to launch a claim.

In the application of discoverability principals in circumstances of a proposed class action such as a price fixing conspiracy, it is plaintiffs’ counsel’s knowledge and conduct that is at issue and not that of the representative plaintiffs. Justice Perell accepted that in situations such as a clandestine conspiracy case in which the perpetrators disguise their identity, plaintiffs’ counsel’s task in conducting reasonable inquiries is not a routine matter. He nevertheless determined that the onus was on the plaintiffs to establish that “they behaved as a reasonable person in the same or similar circumstances using reasonable diligence in discovering the facts”2 and that while onus was low, plaintiffs’ counsel had, in this case, failed to meet it.

Justice Perell acknowledged that plaintiffs had previously sought to take discovery evidence from Bloomberg representatives in the US for use in the Ontario action and acknowledges in a footnote his own decision that had blocked this attempt.3 Nevertheless, His Honour found:

If plaintiffs were to take on the mantel of representative plaintiff to achieve access to justice and behaviour modification, they should act more like the investigative arm of a regulator and conduct a meaningful investigation.4

He goes on to suggest that plaintiffs’ counsel might resort to Anton Pillar or Norwich orders as part of their investigation of an alleged secret conspiracy. In light of the court’s historical reticence to countenance pre-certification discovery, one might well wonder what the court’s reaction would be to a Norwich application that could easily appear to be a speculative fishing expedition.

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